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Vote to end ethanol subsidies revives Coburn-Norquist tax battle

The amendment is strongly backed by the fiscally
conservative Club for Growth, and the proposal has received support in
the past from groups like the Heritage Foundation.

“Today’s way
of doing business is a tax increase on anyone who can’t hire a tax
lobbyist or make large donations to special interest groups in
Washington,” Coburn said in a Friday statement. “Taxpayers are tired of
this game and expect us to eliminate wasteful special interest spending
in all of its forms.”

But Norquist has expressed concern that the
Oklahoma senator’s measure – which does not offset the revenues from
the ethanol subsidy – is a stalking horse for a broader push to find
new tax revenue, something Coburn is calling for more and more to help
close yawning budget gaps.

“His goal is to try and say: ‘Ha, ha,
see in some cases it’s OK to eliminate credits and deductions and not
offset it,’” the Americans for Tax Reform president told The Hill on
Friday. “And then he’ll come back with $2 trillion in tax increases and
try to say that’s somehow not a tax increase. It’s wrong on so many
levels.”

The scheduled ethanol vote comes as Coburn and Norquist
have sniped at each other consistently in the recent weeks and months,
in large part over Coburn’s participation in the Gang of Six.

The
Oklahoma senator has since taken a sabbatical from that group, which
was using President Obama’s fiscal commission as a guidepost for a
deficit-reduction plan. But his stance on raising new revenue still
puts him at odds with Norquist and practically all congressional
Republicans.

Norquist’s group sponsors a Taxpayer Protection
Pledge, which has been signed by the vast majority of congressional
Republicans, including Coburn. The pledge states that, among other
things, the elimination of a tax credit or deduction must be paired
with a corresponding tax cut.

With that in mind, ATR announced
Friday that it was backing a proposal from Sen. Jim DeMint (R-S.C.),
which would eliminate the estate tax and more than make up for the
amount in the ethanol subsidy.

DeMint, who also announced Friday
that he would support Coburn’s ethanol amendment, also proposes to get
rid of a mandate that requires that billions of gallons of renewable
fuels have to be blended into the American fuel supply by 2022.

“Unfortunately,
Washington’s bad ethanol policies don’t end with just subsidies and
tariffs,” DeMint said in a statement. “We must also repeal the mandate,
which my amendment would do.”

In a statement, ATR said DeMint’s
proposal “fills in the gaps” left by Coburn’s amendment, which it
called “half-baked” and a tax increase on its own. The group also said
that lawmakers who backed both the Coburn and DeMint proposals would
not be seen as having broken the "Taxpayer Protection" pledge.

Norquist
also told The Hill that he believes the Coburn proposal is largely
symbolic because it does not propose any alterations to the renewable
fuels standard.

But John Hart, a spokesman for Coburn, told The Hill over e-mail that
the senator would “likely” vote for the DeMint amendment, if and when
it hit the floor, and that Coburn opposed the mandate.

“We’re taking it one step at a time,” Hart said.

The Club for Growth, in a release saying it was naming the Coburn amendment a key vote, struck similar notes.

“It’s
time to end these economically irrational provisions for ethanol, which
should be a first step in eliminating all government subsidies for
energy production, including the abolition of government mandates on
renewable fuel use,” the conservative group said.

Of course, it
remains to be seen how the Coburn amendment actually fares on Tuesday.
While many conservatives may stridently oppose the ethanol credit, the
Senate is still controlled by Democrats, and a fair number of farm
state Republicans still back the subsidy.